Replacement ferries cost more than TS Laevad can expect in penalties paid by shipbuilders ({{commentsTotal}})

Based on available data, the cost of chartering replacement ferries as well as of a potential fine by the state TS Laevad may have to pay is twice as high as what the company can expect to claim in contractual penalties for the late delivery of its four new ferries.

Eesti Päevaleht wrote on Wednesday that the estimate suggested that the penalties payable by the shipbuilders in Turkey and Poland could amount to over €4m.

Adding the cost of the replacement ferry Regula operating the route from the Estonian mainland to Hiiumaa, the company’s expenses would be €12.6m, the newspaper said, quoting a memo submitted to the state-owned port company’s supervisory board in August.

Port of Tallinn didn’t offer comment, but said that neither the size of the penalties nor the cost of renting replacement ferries would be made public.

The charter agreement for the ferry Hiiumaa, valid for one year, will eat up €6.4m of the budget of Port of Tallinn, the paper added.

The cost of the ferry St. Ola, which belongs to Saaremaa Laevakompanii, is €14,900 a day plus €150,000 just for the option to charter the ferry for another month. Hence the cost of chartering the ferry for one month is €461,900, and for two months €1.1m.

The smaller ferry Harilaid costs the company €6,000 a day, with a monthly agreed charter price of €186,000.

The Ministry of Economic Affairs and Communications meanwhile is entitled to fine TS Laevad, who won a ten-year contract to operate subsidized ferry services to the large western islands of Estonia, up to €5m if the state-owned company fails to meet the terms.

The ministry has so far refused to offer even a rough estimate of the size of the fine. Päevaleht’s cost estimate of €8.6m includes a potential fine of €1m.

The fines the shipbuilders have to pay for being unable to deliver the vessels on time are supposed to make up for the extra costs. For the ferry Leiger, built by a shipyard in Turkey, a penalty of €12,500 a day has been piling up since August. For Tiiu, the second ferry built in Turkey, the shipyard will have to pay penalties starting Sept. 15.

The Polish shipyard building the ferry Tõll is paying €37,500 a day in penalties. Tõll was supposed to be completed first, the delivery date was last week. The deadline of delivery for Piret, the second ferry built at the Remontowa shipyard in Poland, is Dec. 1. If this deadline isn’t met, penalties of €37,500 a day will start accumulating on from Dec. 7. Piret is expected to enter service some time in January 2017.

According to agreements, the sum total of all penalties cannot not exceed 8% of the price of the vessel. However, in this case the danger exists that the builder will be left with the boat. Sources have told Eesti Päevaleht that this is one of the biggest fears of the Polish shipyard, since they are already stuck with three vessels built for a Canadian partner.

Following the local elections in October this year, Reform Party founder, former prime minister, EU commissioner, and presidential candidate Siim Kallas took on the job of municipal mayor of Viimsi, a community on the outskirts of Tallinn. In his interview with ERR's Toomas Sildam, Kallas talks about local government, his party, the EU presidency, and perspectives in Estonian politics.